5 Tips for Post-Collegiate Financial Sanity

by Shannon Keough

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Cut off from your parents' health insurance. No more college loans and grants offsetting your expenses. Suddenly, you're forced to set up house, get a job, outfit yourself for it, arrange for your own health insurance, and start planning for your "future." But in this troubled economy, you might be hard-pressed to find anything better than a no-benefits, $10-an-hour temp job. Plus, you're young, and you want to have a good time and not turn into some working drone. What to do?

Based on my own experience and on interviews with other financially savvy young women straight out of school, I've put together these five rules of frugal living to help you maximize the money you make when you're not making much and live a life that offers you fun and fulfillment.

Bring your lunch to work and cook dinner at home. My friend Katie, a former financial researcher, saved nothing for the first nine months of her post-college career. When I asked her why, she didn't even need to think about it. "I was eating out all the time," she said.

A lot of people buy lunch every day. Let's say you spend $5 a day on lunch, five days a week. That amounts to $100 a month that could've been put toward much more lasting purchases. When Katie decided to quit her job and move to Hawaii, she knew it was time for an "aggressive savings plan." Part of this involved cooking for herself more often.

Be creative when outfitting yourself for your new job. Too many young women entering the job force for the first time become convinced they must spend loads of cash on a brand-new "career wardrobe." Unless you know for certain that you'll be working in a place that maintains a "business professional" dress code, you can get by on much less. In my "business casual" experience, I've found the following two rules to work just fine.

The Pseudo-Suit: When workplace convention forces me to dress up, I don a $35 gray skirt-and-top combo I picked up at a consignment shop. The top is cut sort of like a jacket, but it's much snazzier than the dreaded, bulky, shoulder-padded power blazer of my 1980s' nightmares.

The Thrift Store Is My Friend: Instead of spending top dollar on something bland and boring at a department store, I let thrift stores help me fill in the gaps in my closet. I've received rave reviews of my "professional" appearance while clad in an $11 thrift-store ensemble.

Be realistic when it comes to purchasing a professional wardrobe. It's dumb to go broke trying to maintain an image of executive sophistication, if you are making the salary of an entry-level employee.

Beware the no-benefits dream job. So your job doesn't offer you health insurance. Don't do what I did, living dangerously for a year with no health or dental insurance. An unexpected medical expense can be financially devastating. At the very least, take out a high-deductible major medical policy, which will be there for you when a major catastrophe strikes. Once this is established, visit schools for health services like dental cleanings and massage. Or seek out clinics that provide services to uninsured patients, using a sliding-fee scale.

Start reducing your debt now. When my friend Angie moved out on her own at the age of 19, she had virtually nothing in savings. When unexpected expenses came up, she reached for her credit cards. As a result, she managed to accumulate quite a bit of debt.

If you find yourself in debt, Angie suggests that you "cut up all but one of your cards and don't forget to call and cancel the accounts, as well." Angie then suggests getting a copy of your credit report to make sure that all the information is accurate. Finally, as a crafty alternative to debt consolidation services, she recommends taking advantage of 0% APR credit card offers. "Make sure there are no balance-transfer fees or annual fees, then transfer as much of your high-interest debt as you can and make the highest payments you can afford until you pay your debt off." Angie has been doing this for several years and has made a significant dent in her debt.

Limit your luxuries. Nicole, a former co-worker, purchased a brand-new car upon graduation from college because "I worked hard in college. I thought I deserved a new car." This sort of "I deserve it" attitude can quickly lead to massive credit card debt.

Before you get into that trap, think about adjusting your lifestyle. Consider ditching your cell phone. Take public transit instead of maintaining and insuring a car. Cancel your health-club membership and ride your bike, instead. Trade clothes, books and music with your friends. Figure out what luxuries really matter to you (Fancy groceries? A massage? A plane ticket to Prague?) and save your money for those things as a reward for working hard.

Life after college can be a challenge, and chances are that no one is lining up to give you advice on your next move. It's up to you to realize that the decisions you make now are going to affect you later in life. I cringe at how middle class this all sounds at my age, but I know there is nothing sexy about crushing debt, no matter what your age.

"The Dollar Stretcher, Inc." does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation. This article may contain affiliate links. If you click on one of the affiliate links, The Dollar Stretcher could be compensated.